What wastes lay hidden in areas such as: inventory, transportation, space and facilities, time, packaging, administration and knowledge within my supply chain?

Let’s begin by tackling question one for today: What are the guiding principles of your supply chain?

First, have you or your team really defined the purpose of your supply chain? When it was created, was it a matter of just piecing things together, as it progressed, or did you have a strategic plan on how it would fit together to deliver the products needed in the time required? Unfortunately, many supply chains that we first encounter fit into the former scenario. This approach is similar to building a car without fully understanding all of the pieces and systems that must fit together and work in harmony without first having a plan!

Yet, many companies manage a complex supply chain that moves parts and stock keeping units (SKUs) over thousands of miles, through multiple borders and various modes of transportation, with little to no visibility or strategy.

Navigating through this complexity while keeping a "true north" requires a set of guiding principles for a resilient supply chain.

Based on years of experience in operating world-class supply chains, we believe that the following guiding principles are critical in developing a resilient supply chain strategy. These are helpful for cross-functional collaboration so that departments, vendors, and partners can paddle the canoe in the same direction for enterprise success.

Guiding Principles of a Resilient Supply Chain:

Eliminate/reduce all the waste in the supply chain, so that only value remains.

Make customer consumption visible to all members of the supply chain.

Reduce lead time. Time costs money; thus, reducing time saves money.

Create level flow to allocate resources effectively.

Use pull systems to avoid making what will not sell. We can’t sell work-in-process inventory.

Increase velocity and reduce variation. Become streamlined by producing less SKUs more quickly.

Focus on total cost of fulfillment. Costs do not exist to be calculated, costs exist to be reduced.

“All we are doing is looking at the time-line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the timeline by reducing the non-value adding wastes.”

-Taiichi Ohno, Co-Founder of the Toyota Production System

In the coming weeks, our "Supply Chain Recovery" blog series will continue to explore:

Background: How and why did we get into our current supply chain situation?

Current Condition: What are the problems we need to solve?

Goals and Targets: Where do we need to go, and how will we get there?

Analysis of Obstacles: What is in our way and how do we correct it?

Proposed Countermeasures: How do we remove obstacles to solve our problems? What is the benefit of each countermeasure and who do we need to implement them?

Plan: How we will implement each countermeasure? How will we know we are successful?

Follow Up: What we will do in the future to ensure that we stay on track? How we will adjust to new conditions?